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For the mainstream adoption of Bitcoin, the most important players are its users, even though collaboration with the government is essential as well.
For the mainstream adoption of Bitcoin, the important players are users within the community. However, collaboration with the government is important as well.
The potential users of Bitcoin who have the most to gain are people in countries whose financial institutions are broken or corrupt and whose currencies are extremely volatile. This includes almost all of Latin America, Africa, Asia, Eastern European countries such as Ukraine, Russia and Greece.
Despite increased awareness about the cryptocurrency in 2016, there is a lot of ground to cover when it comes to the formal adoption and recognition of Bitcoin.
Jonathan Chester, the president of Bitwage, believes that with regards to Bitcoin adoption, the power ultimately lies with the people and not the government. Chester believes that relying on the government to achieve adoption may be like waiting for a train that may never show up at the station.
“The government is never going to legitimize a technology that challenges its own authority on printing money without the will of the people.”
Chester tells Cointelegraph that in the beginning of 2011, Bitcoin’s market cap was just over $1.5 mln. The majority of users were technologists and cypherpunks. If Bitcoin was on the government’s radar it was only conceptual. As evidenced by FinCEN’s ruling on the virtual currency in 2014 and further upheld by IRS guidance, Chester notes that it was not until 2013 that the government started to take action, when Bitcoin’s price peaked at almost $250 and again at over $1000 per Bitcoin.
Chester says that these prices represent signals to the government that Bitcoin is gaining support. As a response to the growth of Bitcoin, the government needs to respond similarly as previously seen with the rise of interest around private Blockchains within financial institutions.
“All of this is to say that we need to focus on people in order to grow technology. Bitcoin adoption is very much an educational process,” Chester notes. “The fundamental aspect that people need to understand are the use cases and how secure Bitcoin is.”
Chester emphasizes that while in western countries the main values are as an investment or an international payment rail, in the majority of other countries Bitcoin acts as a strong mechanism of value storage and as a domestic payment rail. Once education on the use cases is provided, the next step is educating the users on security.
The Bitwage executive identifies crypto education as the number one concern that his company faces when trying to convince companies and workers to save time and money with a Bitcoin-powered international wage service.
“Even though we don’t require the sending party to sign up, when we speak with BPOs in Brazil, India or the Philippines, they always ask why are you able to get rates that are so much better than traditional mechanisms?” says Chester. “When they hear the answer that leveraging Bitcoin as the underlying rails and their lack of understanding of how secure Bitcoin is as a technology either lengthens the sales process or loses the new potential user altogether.”
“This is likely what happens with anyone thinking about taking their first steps into Bitcoin, whether it is using it as a store of value or a payment mechanism and why it is so important to educate on these two subjects,” he adds.
However, Chester agrees that it is important to work with the government and emphasizes that the Bitcoin community wants to collaborate and operate in good faith. In doing so, the government should be willing to have an open dialogue with the industry when it comes to regulation and enforcement, thus leading to much fairer regulation.
According to Chester, recent developments in California around Bitcoin regulation serve as a prime example of how an industry and government can work together to create a fair and just regulation by scrapping a recently written bill that would have created an unfair burden and stifled innovation within the industry.
He concludes by saying that the true test will be the outcome of the recent IRS enforcement. The IRS enforcement comes as a surprise seeing as Coinbase and all of the high-profile U.S. companies have been working hard to ensure that the parties are working in good faith with the government. As Coinbase mentioned, they are looking into opposing the bill. Currently, there is an industry-wide effort to support Coinbase in their opposition.
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